Should Your Firm Respond to RFPs?

The simple answer is “No”. The more accurate answer is “That depends”.

For decades, the Request for Proposal (RFP) has been identified as the enemy of value, life-cycle cost, quality, innovation, and cost certainty when buying complex, custom, and costly services or goods.

While completely appropriate for purchasing commodity services or goods that are only differentiated by price, the RFP just doesn’t work for more sophisticated and unique services or goods.

In fact, in 1972 the US federal government under The Brooks Act made it illegal to use a price-based RFP when selecting architecture and engineering firms for federally funded projects. Since then 46 states have passed similar laws for state funded projects.

The idea behind the Brooks Act is that government infrastructure is too important to be designed by the lowest bidder, discouraged from all considerations of innovation, life-cycle costs, and quality. And no matter what the pro RFP advocates might say, it is very, very difficult to win any RFP without being the lowest bidder.

Having said all that, there are situations where participating in an RFP will be unavoidable and possibly even to your advantage (but this is only ever possible if you have already invested time and money positioning your firm for sales success outside of the RFP process).

In a perfect world, your firm would be well positioned to deliver custom, complex, and costly services or goods to clients that recognize, and are willing to pay a fair price for, the value you bring to their organization.

They understand that while the price-based RFP process delivers low initial cost, that cost is usually not the true long-term cost, and it usually does not deliver the best quality or value for their money.

But unfortunately, we do not live in a perfect world.

The reality is that if you want to win a typical RFP you are going to have to be a very low, if not the lowest, bidder in the competition. You are going to have to enter a combative stance with your potential client because, in order to win you usually have to propose a solution that is either not optimal, or possibly even just wrong. Your proposal must focus on winning the RFP, which means getting your price as low as possible without consideration or opportunity to present better solutions, innovative opportunities, and quite possibly without the opportunity to even ask meaningful questions.

One RFP-weary colleague commented recently to me “as I’m writing the proposal I am already preparing for the arguments I know I am going to have if we win this thing.”

Hardly a process that sets up a collaborative client-vendor relationship.

So, what do you do?

Should you sacrifice your business to wage a holy war against the RFP process just because it is the right thing to do?

While that might get you the moral high ground, and the applause of your peers, it may also get you the financial low ground. As much as it feels great to rage against the machine, that rage rarely helps you make payroll.

Does that mean then that you simply roll-over, fire up the proposal writing machine and hope for a few wins here and there that will sustain your firm until it figures out how to sell around the RFP, sell to those that don’t use the RFP, or find some magic that makes winning a certainty on every Request for Proposal?

That’s probably not a good idea either. But as down as I am on the RFP there is plenty to be hopeful about.

An RFP is not an RFP is not an RFP.

What I mean is that there are some RFPs that should be avoided at all cost, and conversely (dare I say it) there do exist some price-based RFPs that aren’t too terribly bad.

Even if an RFP has a pricing requirement (which I believe none should ever have and that the budget should always be disclosed by the buyer), if the evaluation criteria are clear and appropriate, with binary and objective scoring scales, and there is no requirement to provide solutions before being hired, then the RFP is moving very close to what is called Qualifications Based Selection (QBS) and that means progress on the buyer side and hope on the vendor side.

Although this type of RFP is not wholly where it should be to deliver optimal solutions to the buyer in a fair and respectful manner to the vendor, it’s better than its hillbilly cousins that have no clear evaluation criteria, unclear and subjective scoring scales, and a requirement to provide “spec solutions”.

Not optimal, but at least an acceptable move in the right direction.

To extend that thought – Canada is moving in the right direction on RFPs.

Professional associations across the country representing architects, engineers, graphic designers, management consultants, and dozens more are speaking out against poor RFP practices and advocating on behalf of QBS like never before. For the first time we are seeing a critical mass of multi-disciplinary groups banding together to advocate for better procurement.

The procurement community is listening and evolving.

Organizations like the Supply Chain Management Association of Canada (SCMA) are hosting events to discuss alternatives to the price-based RFP (such as QBS) across the country.

I have a respectful and positive working relationship with the SCMA (one of their executives even provided suggestions for my book about QBS) and for that reason was initially quite disappointed when they hosted their national conference in Winnipeg (my place of residence) this year and did not select me to present on QBS.

After a day or two of wondering about that it occurred to me that in the previous year I had made my QBS presentation to three of their chapters so in hindsight it would have been repetitive to present again nationally. The fact that they have to dial me down due to overexposure to their members speaks volumes about how much time they are already investing in QBS.

More and more organizations and governments are interested in exploring and testing QBS.

At least once a month I get an e-mail like this.

Good Afternoon Cal, hopefully this finds you well.

I was at the annual conference of the BC SCMA where you presented on QBS and graciously provided us a copy of your book ‘Buying Professional Services’.

I have used QBS a couple times since then and am very encouraged to use it more.

I have recently changed employers and here at my new job, at the City of XXXXXXX, we have a very enthusiastic user base that wants to use QBS over traditional price based selections…

So, should you be responding to RFPs?

I believe the RFP near-future will be much better than the past, but the optimal way to drive sales in your organizations is to have a reputation that attracts customers without a competition, and without the need for you to pursue them. Your primary goals should be to pursue this as your long-term sales strategy.

And not surprisingly, pursuing a strategy of being the most sought-after, in-demand vendor in your market space will help your RFP efforts in many ways.

If you do pursue the RFP path, the real key to success is being very methodical and selective about your participation.

Understanding how to evaluate an RFP in order to make better decisions about participating is the number one way to keeping your sales costs down, and your win percentages and new revenue and profit up.